US Producer Prices Surprise With Biggest Decline Since October PPI fell 0.2% in May on sharp decrease in energy costs
Compared with a year ago, the PPI rose 2.2%, Bureau of Labor Statistics data showed Thursday.
Nearly 60% of the decline in the May PPI for goods was due to gasoline costs. Prices also fell for diesel fuel, commercial electric power and jet fuel. Goods prices overall decreased 0.8% — the most since October. Services costs were unchanged. (…)
Several categories in the PPI report that are used to calculate the Fed’s preferred inflation measure — the personal consumption expenditures price index — were softer in May than a month earlier.
Among those, airfares fell 4.3% and prices for portfolio management services decreased 1.8%. Physician care costs were flat and the cost of hospital outpatient care rose 0.5%. The May PCE price gauge is due later this month.
Stripping out food, energy and trade services, which is an even-less-volatile PPI measure, prices were flat compared with the prior month, the tamest in a year.
Costs of processed goods for intermediate demand, which reflect prices earlier in the production pipeline, decreased 1.5% — the most since the end of 2022. That reflected plunging energy costs.
Ed Yardeni:
By the way, the Fed’s preferred PCED inflation rate will be released at the end of the month for May. The Cleveland Fed’s Inflation Nowcast currently has the core PCED rising 0.10 % m/m and 2.56% y/y. That would put the core PCED below the FOMC’s recently updated end-of-year target of 2.8%!
US Jobless Claims Rise to Highest in 9 Months, Led by California New applications rose to 242,000 last week, more than expected
Initial claims increased by 13,000 to 242,000 in the week ended June 8, according to Labor Department data released Thursday. The figure was above all forecasts in a Bloomberg survey of economists. (…) The four-week moving average, which helps smooth short-term fluctuations, increased to 227,000, the highest since September. (…)
Ed Yardeni:
We aren’t alarmed. Jobless claims sometimes rise at the start of the summer. Last year, they rose 30,000 (sa) from 231,000 the week of May 27 to 261,000 the June 17 week. They proceeded to drop to 202,000 by October.
Trump Tells CEOs He Would Cut Corporate Tax Rate to 20% Trump met with Dimon, other CEOs in private meeting Thursday
Donald Trump promised to lower the corporate tax rate to 20%, further reducing the income levy on the largest US companies that he already slashed while president, according to people familiar with the remarks.
The presumptive Republican presidential nominee pitched his support for cutting the business tax rate during a private meeting in Washington Thursday with roughly 100 chief executive officers of some of the biggest American companies, including JPMorgan Chase & Co.’s Jamie Dimon and Tim Cook of Apple Inc.
The current corporate tax rate is 21%, but even a small reduction represents a tax cut worth billions of dollars each year for profitable US companies. Trump called the 20% figure a nice, round figure, according to two sources briefed on his comments.
Trump vowed to make permanent the Republicans’ sweeping 2017 tax law and urged renewal of key portions of the bill, including tax cuts for individuals and small businesses, which expire next year. He also advocated to exempt tipped earnings from federal taxes, an idea he first previewed at a rally on Sunday in Las Vegas.
The former president also promised the executives he would slash regulations if he won a second term. He also disparaged the permitting process for energy projects and other purposes as yet another form of regulation or taxation. (…)
The former president followed a similar discussion between the group and White House Chief of Staff Jeff Zients, who charted the economic priorities of a second term for President Joe Biden in a discussion with the corporate leaders.
Zients told the executives that Biden was committed to working with the private sector to grow the economy, and detailed the subsidies and infrastructure projects that would come on line over the next few years from legislation passed since Biden was elected.
He stressed that the president would protect pillars of the American economy — including the rule of law, the nation’s reputation on the world stage, and predictability — in an implicit contrast with some of the policies advocated by Trump, according to a person familiar with the discussion. (…)
Leaders there, Zients said, were asking US officials if the country would remain a player on the world stage, suggesting possible consternation over Trump’s isolationist policies. (…)
Trump Likes Tariffs as a ‘Revenue Source,’ Wilbur Ross Says
(…) “President Trump has always liked the idea of tariffs as a revenue source, and that’s where he went with the idea of tariffs on products from day one,” Wilbur Ross said Thursday in an interview with Bloomberg Television.
Ross’s comments came after Trump told congressional Republicans Thursday he was considering raising tariffs in order to offset cuts to individual income tax rates. Trump’s 2017 tax cuts are expiring next year and the presumptive Republican nominee is pressing to extend them and a new tax exemption on tipped wages. (…)
“Tariffs go into the federal budget as receipts every bit as much as taxes do,” Ross said. “So in an arithmetic sense, it’s clearly correct that one could very well offset the other.” (…)
Customs duties brought in $80 billion to the federal government in 2023, according to the Office of Management and Budget. That’s just a small fraction of the $2.6 trillion from individual and corporate income taxes. (…)
Stocks, Real Estate Push Canada Household Net Worth to New High
Canadian households’ net worth rose for a second consecutive quarter, rising 3.3% to reach a record high of C$16.9 trillion ($12.3 trillion), Statistics Canada reported on Thursday.
Net worth in the first quarter of 2024 was supported by rising stock markets — the S&P 500 was up 10.2%, while the TSX rose 5.8% — as well as a rebound in residential real estate.
The agency specified that most wealth is held by “relatively few” households, with more than 90% of net worth held by homeowners as of the fourth quarter of 2023. (…)
Household residential real estate values rose 2.6% in the first quarter, bouncing back from two consecutive quarterly declines. Resale activity was 16% higher than a year ago, driving average resale home prices above C$700,000 in March for the first time since June 2023.
The household debt service ratio, or total payments of principal and interest on debt as a proportion of household income, fell to 14.91% in the first quarter from 14.98% previously. (…)
Household credit market debt as a proportion of disposable income dropped for the fourth consecutive quarter to 176.4%. In other words, Canadians held C$1.76 of credit market debt for every dollar of disposable income. (…)
Who says you can’t trust Congress?
Investors will soon be able to ride Congress’ coattails via one-stop shopping, as Tuttle Capital Management filed SEC paperwork Tuesday for an active management ETF tracking the savviest public servants.
The nascent Tuttle Capital Congressional Trading fund will invest based on 45-day old disclosure data gleaned under the 2012 STOCK (Stop Trading on Congressional Knowledge) Act, identifying up to 50 equity positions based on lawmakers’ investment performance, seniority and committee positions. That targeted approach contrasts with a pair of funds from startup provider Unusual Whales, which track all publicly disclosed stock investments made by Democrat and Republican legislators and their respective families.
Perhaps informing that considered approach, a September 2022 New York Times analysis determined that at least 97 then-current members of Congress had transacted in stocks, bonds or other financial assets “that intersected with the work of committees on which they serve” during the three years through 2021 (the partisan split among that cohort was roughly 50/50).
Analyzing disclosures compiled by data firm 2iQ Research, the NYT likewise found that all but six of the 50 most actively transacting lawmakers “bought or sold securities in companies over which their committee assignments could give them some degree of knowledge or influence.”
“Generally speaking, there is a group of Congresspeople who have generated amazing returns [which] put them in the top echelon of all money managers, and they’ve been able to do that while working a full-time job,” marveled Tuttle Capital Management founder and eponym Matthew Tuttle to ETF.com. “Given that they have to publicly report their trades, keeping an eye on what specific members of Congress are doing should be interesting given their uncanny returns.” (ADG)